Posted on October, 15 2010

Legality is quickly becoming the new baseline for timber products in many of the world’s major markets. Following the example set by the US Lacey Act, the European Union (EU) has banned illegal timber from entering the EU market.

Expected to be fully implemented by 2012, this legislation is having a significant impact on the global forest products industry as companies must learn how to comply and establishing traceability for their supply chains in order to avoid stiff penalties in the future.

“WWF’s Global Forest & Trade Network (GFTN) welcomes this development and looks forward to the day on which Europe is no longer a market for illegal timber,” said George White, Head of the GFTN.

“For too long, those striving to operate responsibly, such as companies participating in the GFTN, have been forced to compete on an uneven playing field against less scrupulous operators.”

The EU has long criticized the practice of illegal logging, but until now, did not have any laws established against it. This new law requires all companies placing timber on the EU market for the first time to demonstrate that they have exercised adequate due diligence to ensure their timber has been legally harvested.

In requiring operators to ensure the legality of their timber products, the Regulation calls for ‘due diligence’ systems to be put in place that address three elements inherent to risk management: access to information, risk assessment and mitigation of the risk identified. This will include supplying information on the country of harvest, species, quantity, and where applicable, the sub-national region of harvest and forest concession.

“The passing of this Regulation sends a strong message to forest managers, forest communities and governments worldwide that their efforts to act responsibly and within the law is appreciated and now needed within this major market,” he added.

Paving the Way
Many industry giants in Europe have long been committed to both legal and responsible forestry, pursuing Forest Stewardship Council (FSC) certification, which includes legality as a core foundation in addition to rigorous environmental, social and economic standards.

“FSC Chain of Custody certification is the best method of assurance that we’ve found to ensure that the timber being used in our products can be traced from responsibly managed forests to the retail floor,” said Julia Griffin, B&Q, a leading home improvement retailer in the UK and GFTN participant. “Having long pioneered initiatives on sustainable timber, we are glad to see that illegal timber no longer has a place in the European market to undercut responsibly harvested timber.”

Kingfisher, B&Q’s parent company and a GFTN participant in China, was instrumental in the passing of the Regulation, forming the Timber Retail Coalition (TRC) along with fellow GFTN participating companies and leading European retailers: Marks & Spencer, IKEA and Carrefour Group.

Through founding the TRC, these companies created a single platform for engaging with policy makers at national and EU levels, campaigning for this legislation and working with the European Commission to find clever and workable solutions on how to implement the regulation in practice.

Securing the Best Market Position
As EU Member States draw up the list of penalties for non-compliance, the regulation does allow for interim enforcement actions for companies suspected of placing illegal timber products on the EU market, including seizure and prohibition of marketing timber products by the offending company. While official enforcement does not start until 2012, the time to address implementation is now in order to secure the best market position.

“Combined with the US Lacey Act, this new Regulation begins to close two of the world’s major markets to unscrupulous actors that contribute to unsustainable and illegal logging worldwide. Companies in both the EU and US must implement appropriate measures in order to demonstrate due care,” said White.

Recognizing that many companies may just be starting out or in the midst of establishing traceability for their supply chains, White suggested the following steps to secure the best market position:

1. Identify risky countries, wood species, products and suppliers
2. Then assume you missed something
3. Brief staff on relevant laws in the countries where they work
4. Ensure your suppliers know the relevant laws
5. If they can’t convince you, they won’t convince a prosecutor!
6. Be prepared to drop suppliers who remain a risk
7. Get systematic about procedures, monitoring and reporting
8. Arm yourself with tools to help you navigate this process

“This is not something to get hung up on or cause you to be paralyzed by fear,” he added. “Avail yourself of the resources available to you like GFTN’s interactive Guide to Legal and Responsible Sourcing and equip your suppliers with the knowledge of the relevant laws in their country by directing them to Exporting in a Shifting Legal Landscape, GFTN’s guide to legal exports.”

“We will continue to welcome companies that seek guidance on legal compliance and are committed towards taking this first step towards responsible forest management and building a solid foundation for robust and responsible forest products industry,” concluded White.

For more information, contact:
George White (george.white@wwf.panda.org)